KPMG CEO, COO and executives step down over Gupta, SARS debacle

In a statement issued on Friday, KPMG has listed the names of the executives who have resigned. The statement also says that the CEO and COO decided to “step down in the best interests of the firm” while it is taking disciplinary action against Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.

“I absolutely understand that ultimate responsibility lies with me. KPMG South Africa is a firm of hugely talented people and I believe it is the right thing for me to stand down and allow a new CEO to restore public trust and build a firm that once again sets the standard for quality and ethics,” said KPMG CEO Trevor Hoole.

KPMG was behind a report on the South African Revenue Services’ (Sars) rogue unit which allegedly spied on senior government officials and set up a brothel. Former minister of finance, Pravin Gordhan, was taken to task over the unit, which fell under his department as head of treasury.

“To be clear, the evidence in the documentation provided to KPMG South Africa does not support the interpretation that Mr Gordhan knew – or ought to have known – of the ‘rogue’ nature of this unit,” said KPMG.

The audit firm has now offered to pay back the R23 million it received for its work on the report or donate it to a charity and to donate R40 million to non-profit organisations fighting corruption.

In relation to the work done for the Gupta companies from 2002 until 2015, KPMG said it fell short in auditing standards, issuing work of a high quality but they “failed to apply sufficient professional skepticism”.

“Despite the deficiencies in the audit work, KPMG International found no evidence of dishonesty or unethical behaviour on the part of the audit partners and audit teams working on the audits for the Gupta group of companies. However, the investigation established that management of many Gupta entities responded misleadingly and inadequately to audit teams’ enquiries about the nature of related party relationships and the commercial substance of significant unusual transactions,” read the statement.

Full list of partners leaving the audit firm is below

The following partners will be leaving the firm:

•    Mike Oddy, Head of Audit and Board member

•    Muhammad Saloojee, Head of Tax and Board member

•    Herman de Beer, Former Head of Forensic and Board member

•    John Geel, Head of Deal Advisory

•    Mickey Bove, Risk Management Partner for Deal Advisory.

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